Thursday, 8 September 2011

Tax and Duty

I remember research from the 1970s on the levels of sales tax in adjacent states in the US. If the difference were greater than about 3%, folk would cross state lines to buy cheaper white goods. Given that America is vast, and distances great, and petrol (back then) cheap, it is the cost in travel-time to secure a saving of say $30 that's important.

Now, when I was in Hungary three months ago, a packet of fags at the airport duty-paid was HUF710 (£2.27). OK, there are only 19 rather than 20 in a pack. This week the price was down to HUF630 (£2.02); outside the airport, ciggies are normally sold in small corner shops, many branded, er, SPAR (yes really - the same 60s logo, wavy line and the rest that disappeared here twenty years ago) and the price is even lower - HUF590 (£1.89). Given that the cost of an easyjet return ticket is about £120 with a 2 hour flight time, and the saving on a quite legitimate and legal smoker's supply of 15 cartouches is now some £750 against equivalent duty-paid UK fags - an annual tax saving (avoidance, not evasion) of £3k for those like me - why wouldn't you? (and decent locally brewed beer is £1 for half a litre ...)

12 comments:

Because in order to make the trip worthwhile, one has to bring in a fairly large quantity. Despite the amazing advantage that we have in a "single market", our government only sees this as a mechanism for the corporatists, not for the individual.

One is very likely to receive the "rubber finger" treatment on re-entry to this fine and free nation. There is also an unknown acceptable quantity to these same customs bods, and along with the pat down, will be the removal (and no doubt resale through their mates in the black market), of our hard won booty.

Um, partly right. There is no 'acceptable quantity' as such - under EU law, personal shoppers may carry dutiable goods for their own consumption without limit. But there is a quantity below which HMRC will not question you - this used to be 3,200 but from this Autumn is being reduced to 800. This still only gives them the right to question you to establish that these are for your personal use - and they can only confiscate if the evidence suggests otherwise. The decision can be appealed both through HMRC's internal procedure and through the courts. An unlawful seizure may result in civil action against HMRC to recover additional costs of paying UK duty in the period between unlawful seizure and return.

If you live in/near London, Brussels can be hard to beat for a fag-run as a cheap Eurostar ticket avoids all the extra expense and hassle of an airline trip. Indeed, you don't even need to leave the station in Brussels. Every Relais (and there's about eight in the station alone) has enormous mounds of cartons of your favourite British fags and English-speaking staff. You might think they exist solely to exploit the tax difference though I'm sure such thoughts would be anti-communitaire and thus unthinkable. There is even a Relais in the Eurostar departure hall selling little more than duty-paid fags.

Belgian duty-paid fags are more expensive that Hungarian and other East European places (I think about €4 a packet) but given the convenience - you can be back home by lunchtime - and the fact that you can bring back as much as you can carry (I can get 6 month supply for two people in one holdall) makes it a bit of a no-brainer.

I have never heard of anyone being hassled by customs over what they can physically carry. It's when you've got a transit van full of (legal) stuff that they might want convincing that you're not selling it on.

Sorry Raedwald but there is no quantity level where HMRC will not question. HMRC state that you are only 'less likely' to be questioned if you conform to their guidelines. There are many cases of people having their tobacco goods confiscated below the guidelines amount.

lt's not all doom and gloom though. lf one goes prepared for HMRC/UKBA you can still bring in as much as you want for personal use. Preparation is everything otherwise one is like a sheep in a pack of wolves.

l've never had anything confiscated and l bring in either 6 months supply or sometimes a years worth depending on finances. l've been stopped and searched ... and interviewed on a number of occasions with amounts of 10,000 up to 20,000. None confiscated! ... and l've been doing this for 20 years.

lndeed, l dedicated my blog to help others purchase their tobacco/cigarettes from the EU and protect them from the HMRC/UKBA highwaymen.

@ right-writes ... don't believe all the hype about what HMRC/UKBA can do ... it's simply not true.

Here's a question to tease the subtlest of minds - how it it that in a region where import duties have been abolished, you can still be charged with smuggling goods from one part of the region to another?

Or to put it another way, why is it that the only way in which EU membership would be of direct benefit to ordinary Brits is denied to us by the UK government?

And why isn't Brussels doing something about this flagrant breach of some treaty or other?

Ah, memories; I had a business trip to Budapest a couple of years ago. Stepping into the main rail terminal for international departures was like stepping back 50 years in time. Gloomy in a pleasant way. A bit like the railway version of Brown's hotel in London. I had a tasty and substantial lunch of goulash in the cafe /restaurant off the platform. Frankly, I found the whole thing charming. The previous night, I had supper in a plain cafe accompanied by a highly decent bottle of Tokaji. I was impressed with Hungary. Thanks for jogging the memory.